Upcoming in Class Homework #9 due Quiz #4 After Break • Homework #10 due Dec. 2 nd • Exam #4 on Dec. 2 nd • Last week of class – Group Presentations • Group Papers – Dec. 9th
Transcript
Slide 1
Homework #9 due Quiz #4 After Break Homework #10 due Dec. 2 nd
Exam #4 on Dec. 2 nd Last week of class Group Presentations Group
Papers Dec. 9th
Slide 2
Comment on the statement that low discount rates should always
be used to evaluate environmental impacts. Are there instances when
high discount rates could produce greater environmental
protection?
Slide 3
Explain why we will likely never run out of a non-renewable
resource such as oil. Does this also imply that we always be able
to extract all the oil we need? Explain.
Slide 4
What has been the general trend in non- renewable resource
prices in the past several decades? What has generally been
responsible for this trend? Is this trend consistent with
Hotellings rule?
Slide 5
When the government allows private firms to extract minerals
offshore or on public lands, two common means of sharing in profits
Bonus bidding awards the highest bidder the right to extract and
paid up-front Production royalties charges a per-ton royalty on
each ton extracted and paid as long as the mineral is
extracted
Slide 6
How will this affect extraction over time? Would either be
consistent with the efficient allocation? Suppose the price path
and size of deposits are unknown. How would the risk be shared
between the government and mining company, for the two different
policies?
Slide 7
MC AC Q $/Q MR
Slide 8
A = represents the stock of a resource a = represents the
recovery rate Amount used over 4 years is A+ A*a + A*a 2 +A*a 3
A/(1-a) for infinity
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Slide 12
The Disposal Decision Recyclable waste comes from either new
scrap or old scrap. New scrap is residual material from a
production process while old scrap is recovered from used products.
When the private marginal cost of disposal is lower than the
marginal social cost, the market level of recycling is
inefficient.
Slide 13
Copyright 2009 Pearson Addison- Wesley. All rights reserved.
9-13 Disposal Costs and Scrap Market If consumers bear the true
marginal disposal cost, more materials could be integrated into
production process; price falls, and total consumption of inputs
would increase as well as the use of recycled materials. Correct
inclusion of disposal cost would increase the amount of recycling
and extend the economic life for depletable and recyclable
resources.
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U.S. has achieved higher recycling rates 32.5% 52% of paper 31%
of plastic and soft drink bottles 45% of aluminum cans 63% of steel
packaging 67% of large appliances Transport, labor and processing
costs are usually significant and play a large role in overall
recycling rates. As recycling becomes more cost competitive,
however, manufacturers rely more heavily on recycled inputs as well
as product design.
Slide 16
Slide 17
Copyright 2009 Pearson Addison- Wesley. All rights reserved.
9-17 Subsidies on raw materials are another source of
inefficiencies. One example is the Mining Law of 1872. Raw
materials are artificially cheap. Undermine the market for recycled
inputs.
Slide 18
Noninternalized environmental damages from the use of virgin
materials will also bias the market away from recycled materials.
These might be damages from extraction or from processing. Host
fees are being used to address the issue of siting of landfills.
Host fees compensate the community that agrees to house the
landfill.
Slide 19
Public polices include volume pricing, refundable deposits and
taxes. Volume pricing are disposal charges that reflect the true
social cost of disposal. A refundable deposit system is typically
designed to be an initial charge that reflects the cost of disposal
and to provide a refund that encourages recycling and helps
conserve virgin materials. Taxing virgin materials and subsidizing
recycling activities can also promote recycling.
Slide 20
Homework #9 due Quiz #4 After Break Homework #10 due Dec. 2 nd
Exam #4 on Dec. 2 nd Last week of class Group Presentations Group
Papers Dec. 9th